There Goes The Housing Market, Home Sales Experience Worst Drop In 18 Years

Sales of existing homes fell 8.4 percent to an annual rate of 6.12 million in March from February’s 6.68 million rate, the National Association of Realtors said. It was the biggest one-month drop since January 1989.

Aw, nuts. Good thing we rent. How about you? If CNN is right, you’re waiting it out.

“Even if they’re not trying to sell their house or getting hammered with problems with a subprime mortgage, consumers can’t ignore the headlines.”

Neuhart pointed out that the Conference Board’s question asking if consumers intend to buy a home in the next six months, found only 2.7 saying they are looking to buy in the April survey, which is down more than 20 percent from the 3.4 percent who were looking to buy only two months earlier.

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Would someone please let people in Boston know that they are supposed to be waiting it out? I am shocked by the listing prices that sellers are asking for their crappy hovels and yet, the homes for sale in the South End neighborhood keep getting snapped up after only one open house for close to if not exactly asking. Downturn? Not where I’m looking. Bah!

These statistics don’t paint an accurate portrait of the market. Real Estate is a localized market. Media outlets love to take poorly performing markets and imply that they are representative of all markets. In my market, Athens, GA, property values have increase by 1-4% per year. Average days on market has averaged around 6 months for as long as our MLS has kept data. No crazy growth has existed, so we are not experiencing a deflation. But that doesn’t make for juicy news, so the media focuses on areas that experienced hyper-inflation and are now experiencing the market correcting deflation.

This is actually good news for us, we currently own a condo in a very desirable area (cheapest buyable homes in a normally expensive suburb, they usually take a day or two to sell) and we’re looking to upgrade to a house. Hopefully we’ll save a lot of money.

@esqdork: Yeah, here in Manhattan, the apartments in my building go for about $1000 a square foot. That works out to about $800K for the tiny one-bedroom we’re in. My neighbor sold for full asking price within 2 days of listing. No slowdown or price drops here….

I bought close to six years ago. Houses around my block are listing for $100K more than what I bought mine for, and actually selling; albeit slowly. One house on the other street had been on the market for 8 months before it sold.

We’re actually in the process of buying a house right now. However, I think demand for the lower end of housing is going to stay strong in Massachusetts for a while. I see more and more of the expensive homes up for sale, but not many of the smaller “starter” homes.

Elsewhere in the country, the drop in sales should push prices down. In the more crowded parts of the Northeast, I expect prices to dip a little, but only enough to convince more young families that they can afford a home.

I’m looking in the Capitol Hill area of Washington DC. I’m watching a quiet street where a friend lives, and all the row houses are pretty much the same. I saw a house list in 2005 for 4x its 2001 sale price, and sit on the market for almost a year before finally selling at 3x the 2001 sale price. But it’s a new year, and market forces notwithstanding, the houses on that street are listing for (2006 sale prices) + 10 percent, which offends me deeply because I can’t quite afford it.

Here in Austin the market’s still going up. Probably because of all the people from California moving here once they figured out they can work similar jobs for similar companies as in the bay area but it’s like the houses are on a permanent 2 for 1 sale compared to the bay area.

That said they’re building huge numbers of expensive (for Austin) condos downtown. I’m not entirely sure who they think is going to live in them. It smells just like 2001 except substitute “real estate” for “internet”

…..It hasn’t slowed down in my area. People buy a small, 75-year-old, 2 bedroom house for $300k, level it, and build a 9000 sq. ft. particle-board monstrosity that extends nearly to the property line in every direction. My house, according to the property tax people, is worth three times what I paid for it 15 years ago. Can’t beat a house as an investment!

…..They won’t get me out of this house till they haul me off to the nursing home!

I’m looking to sell my house soon, and I actually don’t think I’ll have that much trouble doing so. In the last 5-7 years, the cost of housing in Hernando County, FL experienced a dramatic climb, followed by a much less dramatic drop. There are tons of houses for sale here, but people still seem to be asking top dollar for them. If I sell my house at the low end of what 2-bedroom houses like mine are selling for right now, it’d probably sell it in a hurry and I’d still make a tidy profit over what I paid for it. I just heard a story a few weeks ago about a guy who couldn’t sell his house for months until he got a new real estate agent and listed it for $25K less, at which point it sold in 3 days.

@Lula Mae Broadway: Oh, no, this isn’t LA. It’s suburban Birmingham. You can still buy houses in the country in Alabama for less than $50k in some spots. And of course, there are section-8 houses in bad neighborhoods that can be had for half that.

We’re in MA and bought in 2005, which in retrospect wasn’t the best idea moneywise, but we had a baby and really came to need the extra square footage and the second bedroom. We were living in a 550 sf one-bedroom in the city. Condos in our complex are still going for what we paid, so we’re happy enough. We’ll stay for a few more years, not necessarily by choice, and move when we have more money or exceed the occupancy rules (you can’t have more than two people per bedroom, and you can’t convert your basement to a bedroom to skirt the bylaw). We’ll probably get our down payment back, but we have no expectations of a fantastic run-up. Given the elasticity of the market in other parts of the country, I feel like we’ll be okay until we can get into our final house. Small homes and buildable land are in short supply here. Probably everyone won’t have my objection to the Wal-Mart going in down the road.

“Neuhart pointed out that the Conference Board’s question asking if consumers intend to buy a home in the next six months, found only 2.7 saying they are looking to buy in the April survey, which is down more than 20 percent from the 3.4 percent who were looking to buy only two months earlier.”

I’m no statistician, but wouldn’t that be a .7 percent drop and not a 20.0 percent drop?

Atlanta has been a fairly hot market thanks to population growth, but we haven’t had the massive price increases, speculation/flipping, etc. that other areas have seen. Still, lately more and more houses are on the market and are on the market longer, and are usually selling for quite a bit less than the asking price.

In my neighborhood of ~100 relatively new townhomes, as of last week about 20% of them are for sale — I suspect many if not most of those homeowners have been hit by the subprime crisis and are trying to get out. (I’m not one of them.) Needless to say, this glut of homes for sale in my neighborhood worries me; I think I could still sell fairly easily, even right now, as I have an end unit and have made some upgrades, but I’d probably have to take quite a bit less than asking price, pay buyer closing costs, etc. to do it.

Seriously. I live in an older neighborhood (decent yards and wide streets) and houses sell within days of listing in the 650-900k range. The new neighborhoods are all 1 mil+ for detached homes and sell months before they’re built. They just keep building more houses with no end in sight.

The best time to buy something is when it’s cheap. The best person to buy if from is a panicking…er… highly motived seller.

Bad news for sellers, good news for buyers. Owners with no intent on moving anytime soon really have nothing to worry about. Stay put for 5-10 more years and you home value will go back up. It’s those people trying to ‘ladder up’ who get the short end of the stick.

It’s about time prices started to drop. Realtors and tax collectors are the only folks benefiting from growing home prices. If my house was not paid off already, I would definitely be looking at an apartment. The American dream has been high-jacked by the ignorant and the greedy.

@cgmaetc: Exactly — the housing market is cyclical — it can’t be good for sellers all the time. Right now, it’s getting better for buyers. I have been waiting since 2005 (when my RE agent told me the market would keep going up forever) and have been seeing more stuff staying on the market 100+ days and dropping quite a bit. Maybe something will actually be worth buying soon. I’ve got my 20%, now I’m just biding my time. The market will recover, but I hope to get a decent deal before it does.

Also, in Arlington, within a mile of me, there are about 5 brand new condo buildings going up (or that have just gone up), and 3 have already switched from being “luxury condos” to being “luxury apartments for lease.” Two condo conversions (in which they already kicked out renters and renovated the apts and marketed them as condos) are back to being apartments. Ah, the canaries in the coal mine…

here in Illinois (University of) the market is still going strong. all of the new subdivisions on the outskirts of town continue to build like crazy and the existing homes in the same subdivisions don’t last long. the asking price on the homes the same size as mine are up anywhere from 5-15% from what i paid just one year ago.

I was freaking out a bit until I sold. We put it on the market last August. A word of advice: if you’re in a slow market, evaluate your selling options carefully. Those “DIY” MLS programs and FSBO? Not a good idea if you don’t have a lot of time for your house to sit. Sure, you MAY save money, but if it’s a slow market it’ll take a long time to get that first offer. Even then, that offer may be complete crap unless the buyer is qualified.

One more thing: price. Drop any idea that it just takes “the right person” to find your “special” house at the inflated price you think is justified. Look around, figure out what others have SOLD FOR (forget asking prices), and price accordingly. Why would somebody want to look at your house if it’s more than others exactly like it? There’s a word for that “right person” you think is going to look at your house – sucker.

Here in NC the market is still strong too. My parents and sister are all successful realtors, and they work from can-see to can’t-see 7 days a week trying to keep up with demand.

We sold our home in Raleigh in the usual 90 days at full asking price (just closed a few weesk ago), and it was a crap house without a garage or a usable backyard (sloped steeply to a ravine). Like other posters have said, it’s all about being realistic. I’d’ve loved to get $200k for that little house, but no one in their right mind would pay that price. We had to list it at something realistic. Buyers could care less that it was our first home, or had deer that sauntered through the yard, and weren’t buying for the lovely little crabapple tree that the deer went for.

Home prices have of course gone up in the Tampa area as well. The was caused by speculators (I refuse to call them investors) who came in when they saw a growing area with affordable homes and bought as much as they could affecting the demand and thus pushing the price up. Now these speculators have paid to much and can’t unload their property for anywhere near the astronomical artificially inflated prices they paid for them, let alone the 25% profit they hoped to make. I hope their greed puts them on the street and when I get out of the police academy and the wife gets out of nursing school we can buy one of their properties for a reasonable price from bank foreclosure.

Michigan is in the TOILET, real-estate-wise. I think we’ve broken all the foreclosure records for anywhere but New Orleans. Several banks are refusing to even buy existing mortgages from anywhere in the state, and houses are selling for, in many cases, 50% or less of their SEV-based market value.

…And this is why you shouldn’t screw all your small businesses in a concerted effort to bend over backwards for the Big Three. It’s amazing what laying off, firing, and/or backing out of the pensions & retirement for a couple hundred thousand people will do to a place.

In any case, I work in/near finance and have been waiting a few years for things to “bottom out” so that I can buy a home, which I intend to live in for 5-10 years, and hopefully sell or refinance at a profit. Though I could probably wait a little longer, even, things have gotten bad enough (from a seller’s point of view) that I’m making offers now.

The people *really* getting slammed in all this are the investors — people who tried to buy an *extra* property when prices started to fall, and then discovered that they couldn’t rent it (falling home prices are outpacing the cost of renting) or re-sell it, and got stuck paying the mortgage on it. I see a lot of those people *desperately* trying to unload their homes, often at ridiculous prices. (i.e. three bedroom, great shape, nice neighborhood, $130K. Six bedroom colonial w/fireplace & huge yard, but needs a little work & on a busy street, $107K. THAT ridiculous.)

I’m really glad that the people I work with saw this coming, and started telling me to get ready to buy a few years ago!

Real estate is in the crapper here in Indiana as well, with one of the highest foreclosure rates in the country. So what were Hoosiers greeted with this week? News that property tax rates will be increasing an average of 24% this year. Need a cheap house? You’ll have your pick of repos very soon!

Real estate is EXTREMELY regional. The figures that get quoted in the press don’t matter much to anyone but the big homebuilders that build across the nation. These figures don’t accurately reflect anything but a few markets that just happen to fall on the average.

Heck, I build spec homes for a living and I’m not worried because even though our market is down a little, I run my business responsibly and don’t over-leverage myself and maintain a good amount of capital.

Getting “freaked out” about the real estate market for 99% of the people is like getting freaked out when your mutual fund dips….it’s going to happen and you should expect it.

is anyone surprised by this? in a knee-jerk reaction to the pssibility of regulation, subprime lenders have all but eliminated the industry. you’ve just reduced the number of “qualified” buyers (depending on region) by as much as 50%.

There’s nothing to ‘wait out.’ Prices may go down a little, but in the meanwhile, you’re shoveling money into your landlord’s pockets and missing a tax break. Unless your market is hyperinflated and there’s a crash risk, or you need to move in less than three years, you’re better off owning. You’ll get that tax break, and you’ll get equity, which can comwe in very handy in a pinch.

Also, for everyone hoping for a crash to make homes affordable, remember, such a disaster may end up taking your job with it. There’s no magic formula for cheap houses and good wages.

@gilman: I’m in North Austin (near the Lamar/Rundberg intersection), and the homes that have sold in the neighborhood where I bought mine three years ago have sold for significantly less than I paid ($85-90K as opposed to $120K). I’m not too freaked about it as my tax valuation is going back down accordingly (and my house has some nice extras — good tile, deck, hot tub — which the others don’t), but at least for this neighborhood it doesn’t smell anything like a sellers’ market to me.

As for the silly people living in Manhattan or somewhere… erm… ouch. Might I venture to say that I’m glad I’m not you?